Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / The following information describes the value Lori Landlord places on having her five apartment houses repainted
The following information describes the value Lori Landlord places on having her five apartment houses repainted. She values the repainting of each apartment house at a different amount depending on how badly it needs repainting. Value of new paint on 1st apt house Value of new paint on 2nd apt house Value of new paint on 3rd apt house Value of new paint on 4th apt house Value of new paint on 5th apt house $5,000 $4,000 $3,000 $2,000 $1,000 PLEASE NOTE: These amounts are Lori's willingness to pay... NOT how much money she has. Plot Lori Landlord's willingness to pay. (NO ANSWER REQUIRED HERE...Plot this on paper if you think it might help you answer the questions, but don't worry about turning it in. Plotting it out may help with the remaining questions.) Look at each apartment house individually. Calculate the amount of Consumer Surplus on each individual unit, then add them up. a. If the price to repaint her apartments is $5,000 each, how many will she repaint? What is the value of her consumer surplus? b. Suppose the price to repaint her apartments falls to $2,000 each. How many apartments will Lori choose to have repainted? What is the value of her consumer surplus? c. What happened to Ms. Landlord's consumer surplus when the price of having her apartments repainted fell? Why? Use this brief video to refresh your understanding of consumer surplus. When you are ready, address the following question: http://www.investopedia.com/video/play/consumer-surplus/ (This next part should be about 150 words.) 2. Share 2 experiences where you experienced consumer surplus. (you paid less than you otherwise would have been willing to pay). Also share your thoughts on why the surplus happened; in other words, why did you think you would pay more than you did.
If the price to repiant her house is $5000. She will have only one option to repaint her only 1st apartment becasue she is only willling to payb $5000 for 1st apt. The value of Consumer Surplus value in her case will be Zero because Willingness to pay is equal to price of repaint.
b. If the price to repaint falls to $2000. then, landlady will repaint her 1st, 2nd, 3rd and 4th apt becasue she is willingness to pay more as compared to real price. In the case of 5th apt, She is willing to pay only $1000 but the price is $2000. So, this repaint of 5th apt will not be possible.
The value of consumer surplus will be:
For 1st apt = ($5000 - $2000) = $3000
For 2nd apt = ($4000 - $2000) = $2000
For 3rd apt = ($3000 - $2000) = $1000
For 4th apt = ($2000 - $2000) = $0000
So, Value of Consumer Surplus is ($3000 + $2000 + $1000 =$5000)
c. When the price of having her apartment repainted fell, The total value of Consumer Surplus is $5000. This means that she can repaint her 5th apart as well still she will be having $4000 consumer surplus .
2. I experienced consumer surplus I purchased a carrier ticket for a trip to Disney during school get-away week for $100, yet I was expecting and ready to pay $300 for one ticket. The $200 speaks to my buyer excess.
Another one is at a neighborhood ranchers market, 3 little dogs of an uncommon variety are offered available to be purchased at $600 each. A few people at the market are happy to address the market cost. Barbara is happy to pay $900, Christine is eager to pay $800, and Dan is happy to address the market cost of $600. Thusly, Barbara's customer surplus is $300, Christine's overflow is $200, and Dan is the negligible purchaser who appreciates no shopper surplus in this exchange.
This just happend because when we are expecting the price of some material high becasue of its nature of selling or its demand behaviour or by its importance in the market. then, we are willing to pay more. In that case, If the price is less than we were thinking , then its a consumer surplus.
